Blockchain technology has become one of the hottest buzzwords since the launching of Bitcoin, and the topic of blockchain and its types has been a subject of research.
Bitcoin is deployed on a public blockchain which is why public blockchains are very popular. Nevertheless, there are other existing blockchains namely private, hybrid, and consortium blockchains with features that can also be explored.
These other types of blockchains have features that can be harnessed and utilized when they are constructed based on purpose. With the problems of public blockchains, the features of these blockchains can be reviewed to leverage them and combat the issues plaguing most public blockchains.
Below we will explore other blockchains and their unique features.
Private Blockchains; Features and How They Work
One feature of blockchain that makes it a topic of interest is decentralization, but not all blockchains are decentralized. Some blockchains are not decentralized and they are called private blockchains. Private blockchains are blockchains that have minor networks because they are managed and controlled by an entity. Due to their size, they have higher scalability strength and low transaction costs. It is structured in a peer-to-peer format but has poor security because of the few nodes on the blockchain, hence, they can’t be trusted.
According to Simplilearn, they require a central Identity and Access Management (IAM) system to function. This can make them centralized because they are not open source. Below are a few features of Private Blockchains.
Features of Private Blockchains
- Data is inaccessible to the public
- Private blockchains are prone to 51% attack. They are managed by one person and so are not very secure
- They have fewer nodes, make faster transactions, charge low fees, and maintain data privacy.
- It is highly centralized and therefore lacks a collective consensus mechanism
Private blockchains can be utilized by organizations or entities that want to monitor and control their data. Because they can be run by a few private nodes, the blockchain can be easily controlled and monitored to suit the needs of the organization that owns it.
A Hybrid blockchain is a mixture of public and private blockchains, they are combined and managed together as one entity.
On a hybrid blockchain, the data is stored on a private blockchain but made accessible to others for validation on a public blockchain. In essence, hybrid blockchains give the advantages of transparency and insurance of data which is a feature of public blockchains, and the management and privacy which is a feature of private blockchains because transactions take place on the private blockchain. Below are a few features of Private Blockchains.
Features of Hybrid Blockchains
- Its transaction cost is low and speedy compared to public blockchains.
- It is not prone to 51% attack or hacking because it can be customized to the preference of the entities in charge. So, data availability and accessibility are controlled.
- It is simpler to manage, adaptable, and efficient.
- It meets regulatory/compliance requirements due to the features of management it has. Regulatory bodies would prefer a hybrid blockchain because it is
- Because it is a mixture of two networks, it allows for better interoperability which is a challenge blockchains face.
The hybrid blockchain is a balance between the excesses of the private blockchain and the public blockchain. Organizations looking to attain more decentralization without exposing too much information to the public can look to explore this particular type of blockchain.
A consortium blockchain is also known as a federated blockchain. Just like the definition of federation which is a union of nations with a central authority but sovereign in themselves, the consortium blockchain consists of various private blockchains that are owned and managed by certain companies. It is a group of independent private blockchains that are formed to carry out unified tasks.
GEEKSFORGEEKS holds the opinion that, in sectors where multiple organizations must work together on a single platform while keeping control over their data and transactions, this kind of blockchain can be explored.
- It maintains decentralization because few people have permission to the data records.
- It allows for teamwork, idea-sharing, and better efficient workflow because it has a limited few users and also equal ownership by the group of organizations.
- It is immune to the 51% attack because it is not managed by one entity and so a group of hackers cannot mount an attack on it
- Trusted participants are chosen to authenticate and verify data which makes it more secure and speedy to execute.
- It is not entirely decentralized and not entirely centralized. It is based on the regulations, agreements, and prerogatives of the groups of blockchains.
- The data can be modified due to a few nodes on the blockchain. This makes data control and management easy.
The difference between consortium and hybrid is that they both operate the public and private blockchains together. A consortium is a group of independent associations that have a blockchain together while a hybrid can be just one organization operating a public and private blockchains.
The different types of blockchains can be studied to know the best use cases for them in any application. Hence, public blockchains wouldn’t be the only known or used blockchain when other blockchains can be maximized for productivity accordingly.